An Incremental Approach Towards Financial Inclusion: Attempts from a Multinational Corporation to Scale Up Inclusive Innovations

Verena Bachler

Student thesis: Master thesis


More than 2 billion people worldwide lack access to the formal financial system. Mostly, these are low-income people, women, young people and people living in rural settings. Various constraints in the financial ecosystem, faced by clients and providers, impede an efficient match of demand and supply. Instead, the excluded are forced to utilize risky, unsafe and expensive services from informal providers. As a result, they are vulnerable to income shocks and face difficulties to access money for investments when opportunities occur. The concept of financial inclusion aims at making formal financial services work for the excluded and has been recognized as an important means to strengthen economic development, while reducing poverty and inequality. Despite some recent progress, highly scalable solutions for financial inclusion are still an exception. Targeting mainly low-income people, solutions need to be provided responsibly, yet commercially viable to sustain in the long-term. The private sector, being the most active player in the innovation system as argued by research, is assumed with the main responsibility of innovating such solutions. This paper follows a case study design to investigate how a multinational corporation that is sponsored by a charity, attempts to achieve financial inclusion in a sustainable and responsible way. Insights are drawn from observations and interviews conducted during a personal visit to the firm’s research and development (R&D) lab in Nairobi. Findings suggest an incremental approach towards financial inclusion. In a first phase, the main value proposition needs to focus on wealth generation and empowerment. Financial services are to be added incrementally, once underlying problems of wealth generation have been addressed. By embedding financial services into a solution that creates value beyond financial inclusion, initial adoption is enhanced and potential impact of financial services is increased. Scale can be reached by targeting innovation efforts towards the most powerful actor in a local value chain, who frequently interacts with lowincome people based on a trusted business relationship. In return, existing distribution networks and resources can be leveraged to increase accessibility and usage of financial services. Findings suggest that the innovation team should focus on a human-centric innovation approach, instead of putting too much emphasis on the technological and business aspect of innovation. For this purpose, a diverse innovation team should be composed, including traditional innovation roles complemented with social scientists, who are experienced in the field of development. The findings yield practical implications for strategists of private institutions who aspire to spur financial inclusion. Moreover, some theoretical and practical implications are contributed towards the still fuzzy concept of inclusive innovation.

EducationsMSc in International Business and Politics, (Graduate Programme) Final Thesis
Publication date2016
Number of pages86